Armstrong Economics Blog/Economics Re-Posted Jun 21, 2021 by Martin Armstrong
There have been very unusual trends unfolding in the labor market. US workers have been quitting their jobs in record numbers all because the government was paying extra free money for unemployment. The $300 bonus, on top of everything else, has led to many people just staying home. One neighbor of a friend in an apartment was yelling that Governor DeSantis was horrible because he canceled the $300 bonus, and she can’t afford to stay home anymore — OMG. So far, 23 states ended the benefits, and 8 states are also terminating this extra $300-a-week-benefit.
These bonuses have really distorted the labor market. One local businessman I know says he gets 20 to 30 calls about jobs per day. Maybe one person actually shows up. All they have to do is claim they looked for a job to keep the benefits rolling in. This has created high unemployment, while simultaneously preventing small businesses from reopening to full capacity. This really hit in NYC.
The recovery from the pandemic has been exceptionally strange, for not only has the economy had to deal with the insanity of Fauci constantly changing positions, but this collision between public health measures and economic relief has unleashed social changes that have been inspired by the experience of this enduring coronavirus mismanagement. This has resulted in a labor market that seems, on the one hand, to be very hot, yet at the same time very cold for jobs that use to be salary. Even the oil industry has laid off thousands of workers with no intention of re-hiring.
The high number of long-term unemployed implies a very loose labor market, while the number of firms who say they can’t fill jobs suggests a tight one. But the tight market is the lower end, particularly restaurants. Nearly 4 million kids dropped out of college. Those jobs are typically filled by college students earning money while in school. With schools virtual, this also added to the shortage of labor in that category. Therefore, we are witnessing a conflict between these two sectors in the labor market that is creating tremendous confusion about the fate of the economy.